How The Biden Administration’s ‘Junk Fee’ Policies Will Hurt Consumers

In his State of the Union address last week, President Joe Biden touted his policies against “junk fees,” vowing to save Americans billions by eliminating hidden charges across a variety of industries. Two days earlier, his administration launched a new Strike Force on Unfair and Illegal Pricing, co-chaired by the Department of Justice and the Federal Trade Commission, to crack down on illegal corporate behavior that keeps prices high.

By interfering with companies’ pricing structures, the administration risks creating a host of unintended consequences that could lead to higher prices and reduced access to services for many Americans.

First, it’s important to understand that what the White House deems “junk fees” are often far from arbitrary charges. Many of these fees serve important economic functions, such as deterring risky behavior and enabling firms to offer lower upfront prices. Overdraft fees, for example, help banks manage the costs and risks associated with customers who overdraw their accounts. Banning or capping these fees could lead to higher minimum balance requirements or monthly fees, effectively locking out lower-income consumers from the banking system.

Read the full article on Forbes.